Archive for December, 2010

According to some quarters, 2010 was the year of the revenue assurance professional – for the third year in a row. But looking past the marketing spin (RA people are good at that) what was the big revenue assurance news in 2010? From the only site that can and will tell you what is really happening in revenue assurance, here is the talkRA review of 2010.

Mark Yelland and David Sherick publish Revenue Assurance for Service Providers, the first new book about RA in longer than I care to remember. Mark joins me on the podcast to talk about his 5-dimension analysis of revenue assurance.

It has been a good year for Subex, and they will finish it on a high after winning a USD3M deal to deploy their ROC fraud management, revenue assurance and data integrity platform for an unnamed Asian operator. You can read the press release here. Earlier this month Subex announced the deployment of the ROC FMS and RA system in West Africa’s Atlantique Telecom.

Recent interviews with Subex boss Subash Menon reveal that he expects his business to post even better results in 2011. He predicted EBITDA would improve from 32% in 2010 to 35-36% in 2011, and that revenues would grow by 15%; see here. Some of this improvement will be driven by larger contracts that include managed services, and because managed services will contribute a larger share of overall revenues. Menon predicted managed services will grow from representing 15% of revenues this year to providing 25-30% of revenues within a couple of years; see here. That would be particularly good news for investors, as managed services deliver more reliable ongoing revenues than one-off implementation projects.

It’s been a while since I last posted to talkRA so in the interests of transparency, I now work for Ernst & Young and anything I post is my opinion only. With that now officially declared, on with the post.

Though I’m still an EY newbie, what has become apparent to me already is that lessons learnt in telecoms RA have a broader application across other many other industries and business processes.

It is common to hear that telco RA skills are well suited to high-volume, low-value transaction industries like financial institutions and utilities (as examples). It’s also an emerging (or even emerged) trend that RA skills are being used to tackle other challenges within a telco. Both the above are evident from where the software vendors are positioning themselves and taking their bets about where they believe the growth exists. This can also be seen in discussions within telcos about where to next for RA to continue to add value, and be seen to add value, once the low hanging fruit has been picked.

However, it would be unwise to think that only telcos or those with large volumes of transactional data face challenges with the loss of value through a business process. Some of the fundamental RA activities are around ensuring all calls, sessions, events etc that should be charged, are being charged; checking that all services provided are being charged for and that everything on the bill is charged in accordance with agreed terms. Hopefully nothing controversial in the above but remove the telecoms terminology and simplify – ensure everything that should be charged is being charged and this is at the right amount. If you can work with the complexity of telecoms data and business rules then working to achieve the same end objective within other industries should be possible.

And indeed it is, but while I haven’t yet experienced the complexity of telecoms data, I have found that there are more data quality issues that need to be addressed before making use of the data. It’s also fair to say that the business rules of how to treat that data and how to add value to it (e.g. price it), is equally complex outside telco as it is inside telco. As RA people we often complain of the complexity that the marketing people dream up when setting pricing structures but this is not unique to telco as revenue risks are sought to be stablised. In order to manage the risk of revenue variations due to both known and unknown external factors, I’ve seen many contracts established between organisations which seek to account for every possible variation (if oil goes up, your cost will go up by a factor; if shipping costs change, same story etc). And of course, where there is complexity, there is risk of error and loss of revenue or incorrect inflation of costs.

This leads me to my concluding remark. For most, if not all, organisations, the bill for telecoms services is not the most significant one. Organisations issue and receive invoices every day – many of which, at least on the issue side, are business-to-business transactions rather than business-to-consumer. The value of these B2B invoices and the complexity of the contracts negotiated mean that telco revenue assurance skills, methodologies and tools can, and should, seek a broader reach beyond telco.

It is good to see an old mate generating positive publicity about the fight against fraud. Nixon Wampamba can make a decent claim to the title of “most travelled RA practitioner”. He has been employed by operators in South America, Europe and Africa – and that is before considering all the countries he visited as a globe-trotting consultant. Nixon now spearheads the Revenue Assurance and Fraud Management function at Bharti Airtel Ghana. Even so, making the news must be a new experience for Nixon. Nixon was quoted in this story about unlicensed termination of international calls in Ghana and his insights were reported at length in this account. Nixon gave his expert evaluation of a simbox fraud that resulted in eight arrests:

On the scale of it, the fraudster had over 200 Airtel SIMs. If we use the standard average for simbox fraud, each SIM is generating around $40 a day. Hence the total estimated revenue is $240,000 per month. With government losing $72,000 per month in tax/levy collection.

Operators lose out when fraudsters disguise international calls to look like they originated locally. That said, this story is not just about arresting suspected fraudsters in Ghana. It also touches on the more controversial aspects of how governments intervene in the international telephony market. Ghana’s government levies 19 cents (approximately USD 0.13) per minute on all incoming international calls. They are not the only government to use international traffic as a source of revenue. The practice is arguably a stealth tax because customers are not aware of how much of their bill goes to the government’s coffers. Customers get the impression that operators are exploiting them with high charges, even though some of the charge is unrelated to providing the service or making a business profit.

Two wider economic consequences flow from the government’s revenue generation activities. First, raising the legal price for calls boosts the market for criminals who provide low-quality bypass services. Second, communications is an enabler for the wider economy, so increased call costs is a drag on overall economic growth. As reported in the story, the operators of Ghana are opposed to the government’s monitoring of calls in order to levy surcharges. However, within this bigger context, it is heartening to see some press for the under-appreciated role of the Fraud Manager. Whatever the rights or wrongs of the law, crime is a plague on society, and guys like Nixon fight crime every day.

American RA vendor ATS has made a strategic investment in fellow US firm OpenVault. You can read the press release here.

OpenVault specializes in providing SaaS offerings that help broadband providers to manage bandwidth utilization. In addition to the investment, the firms also hint at the potential for more extensive cooperation. The move by ATS confirms that one evolution path for revenue assurance is to add value through better exploitation of the network. ATS celebrated 15 years in revenue assurance during 2010. Forming a partnership with OpenVault shows how ATS looks at the future.

Revenue Assurance Book

Since its release, the talkRA book, Revenue Assurance: Expert Opinions for Communications Providers (ISBN 9781439851500) has gained praise from critics and topped the sales of revenue assurance books on Amazon. Available in hardback and as a Kindle e-book, Tony Poulos called it "a must for anybody that works in RA". Read more about its contents and see the list of worldwide stockists here.

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